Malta-Croatia Double Tax Treaty

Malta and Croatia have started to have significant trade relations at the beginning of the 90's. These relations have led to the signing of a double tax agreement in 1998. The Malta – Croatia double taxation treaty was enforced in 2000 and it covers the following taxes:

• -          the income and the profit taxes in Croatia;
• -          the income tax in Malta.

In order to be valid, Malta introduced the agreement in its Income Tax Act. Our lawyers in Malta can offer more information on in the current Income Tax Law.

General provisions in the Malta – Croatia double tax treaty

Like other Maltese double taxation agreements, the one with Croatia provides for the avoidance of double taxation for both natural persons and companies resident of one or both countries. Residency is established through a place of management in the case of Croatian and Maltese companies and based on domicile for natural persons.

In the case of companies, the agreement for the avoidance of double taxation between Malta and Croatia also provides for permanent establishments and associated enterprises which will be taxed in the country where the income is generated. Branch offices and subsidiaries are deemed permanent establishments for the purpose of this treaty.

The Malta – Croatia double taxation treaty also establishes that income derived from real estate will be taxed in the country where the property is located. Capital gains will also be taxed in the country where the income arises. The same principle applies to business profits.

Our law firm in Malta can offer more information on the taxation of foreign companies in this country.

Avoidance of double taxation in Malta and Croatia

In order to avoid the imposition of one or more taxes twice, Malta and Croatia have agreed to avoid double taxation through the following methods:

• -          Croatia will grant a deduction on the taxes paid in Malta;
• -          Malta will offer a tax credit against the tax paid in Croatia.

The Malta – Croatia double taxation treaty also provides for the following reduced rates:

• -          a 5% rate on dividend payments;
• -          a 0% rate on interest payments;
• -          a 0% rate on royalties payments.

For full information on the double tax agreement with Croatia, please contact our Maltese lawyers.